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Back in 1949, Frank McNamara took his wife out to dinner at Major’s Cabin Grill in New York City. When the couple had finished their meal, Frank discovered that he’d left his wallet at home. Fortunately, his wife saved him from having to wash dishes by paying the bill. Reflecting on this awkward occurrence, Frank invented the Diners Club card to solve such embarrassing situations.

That’s how the world’s fascination with plastic money began. And it’s a sure bet that millions of people around the world will use that plastic again this season on gifts and entertainment. Many will spend more than they can afford, adding to their already mounting pile of debt on one card, and perhaps two or even more. The following suggestions may assist you in staying cool, in good cheer, and credit card clear!

Plan as though your finances depended on it

Many individuals and families hit the ground running less than 24 hours after their Thanksgiving dinners, wanting to make full use of the first shopping weekend of the Christmas season. Unfortunately, most are just thinking about the bargains they’ve circled in the local newspaper. True to form, they buy, buy, buy with or without a gift list and certainly without a definite plan or budget.

If you cringe at the notion that you need a well-written and comprehensive plan because you’re afraid that it will spoil the spontaneity of the yuletide season, then consider the alternative. If you’ve charged significantly more than you can pay off when you receive your credit card statement, the balance due—plus interest—will continue to show up on those statements over the next several months.

The first part of your Christmas plan should not be dollars and cents but deciding what top five spiritual values you would like your family to experience this year. Consider joining your church’s choir for its special Christmas Eve service or reaching out to the less fortunate in your neighborhood; experiencing the simplicity that was part of your grandparents’ era; exchanging gifts that were not purchased from a retail store; or eating goodies created in your very own kitchen. Then focus on the true joy of the season with friends and relatives.

The second part of your Christmas plan can then be to list the individuals you want to buy gifts for this season— be it kids, coworkers, friends, or family. Then beside each person’s name, note how much you intend to spend on him or her, where to purchase the gift, and when that gift should be presented. When making that list, remember the old saying that too often we purchase for people we don’t like, who seldom appreciate what we give, with money we don’t have.

Part of your Christmas budget needs to include all the other expenses at this time of the year, such as house and tree decorations, admission to special holiday events, charitable donations, child care, Christmas cards, postage, and gift wrappings. After you’ve added up these expenses, you may find yourself reeling from the shock of how much everything will cost. Now is the time to trim your expenses and bring them into line with your budgeted income.

To help you stick to this budget, purchase a box of envelopes, and then place a recipient’s name or a spending category on each one. Next place the appropriate amount of cash you’ll need in each envelope. Now go shopping for an item that fits the person with the cash that’s in the envelope. And be sure to leave your credit cards at home so you won’t be tempted to spend more than you can afford.

Christmas budget

Make this Christmas season an opportunity to teach your children and teenagers some real-life budgeting skills. Most kids want everything on their lists and have no concept of what their coveted items really cost. So early in December, inform your youngsters how much you are going to spend on each of them this year. Have them research the prices of the items on their lists and then prioritize their wants according to the Christmas funds allotted to them.

Also help them to make lists of the friends and relatives they would like to remember, and then help them decide how much they can save from their regular allowances and other earnings to cover the costs of these gifts. Show them how to shop at discount shops, clip appropriate coupons, and scan the newspaper for holiday sales.

Christmas stockings and sacks

How often have you said to yourself, “The wrapping paper, bows, and cards cost more than the gift itself”? To offset those costs in my family, we purchase a special Christmas stocking for each newborn child or grandchild, which is theirs for life. In the stockings, we place those small items we know they have been looking forward to. This spares us having to package and wrap them individually.

Another way to save a lot on gift wrapping is to make a “Santa sack” for each of your children. By sewing together three large panels of special yuletide fabric—with a drawstring at the top—you can place all the toys, books, and knickknacks inside, and then place the sack under the Christmas tree.

For grown-ups with special hobbies, put a wide array of gifts with a common theme in one basket. Examples include a gourmet basket of fresh spices and herbs with a unique kitchen tool and jars of favorite spreads; or a writer’s basket with a year-round journal, special stationery, distinctive postcards, and exclusive return labels; or a picnic basket with everything from a tablecloth to bug spray.

Make it Christmas in July

I love the idea of IOU yuletide gifts. In an e-mail to Cheapskate magazine (July 1999), one individual told about giving cards with this simple saying: “Roses are red/Violets are blue/One dozen chocolate cookies next July/Is my Christmas gift to you.” Instead of cookies, it could be a box of fresh peaches, tomatoes, or other fresh produce from your garden. It could be a strawberry pie or fancy jars of the recipient’s favorite jam. Don’t feel bad about not giving at Christmas, because until two centuries ago, Christ’s birthday was a noncommercial—and consequently a nondebt—religious holiday.

Balkers versus limiters

Mary Hunt, in her book Debt-Proof the Holidays, writes about the large families who have at least one member who tries to convince everyone else to limit gift giving so as to relieve the financial pressure for all. And, without fail, one other family member balks at the idea. The Balker believes the one who put forward this idea is just plain cheap, mean, and selfish or doesn’t really care to give the best. The Limiter, on the other hand, is convinced that the Balker is up to his eyeballs in debt—or wants to show off his or her limitless resources. A family compromise may reduce tensions and add dollars to wallets and purses.

Give yourself a reality check

Finally, there’s the temptation of overspenders to shop with visions of family members and friends opening their presents while “oohing” and “aahing.” To counter that temptation, I invite you to visualize yourself paying off the credit card debt over the next 12 months. If the gift doesn’t seem worth that anguish, return it to the store shelf and congratulate yourself for being a thrifty shopper.

Less Debt, More Joy

by Gordon Botting
From the December 2013 Signs